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Charges and Issues in the FIFA Indictment

Trying to wade through the indictment in the FIFA criminal case is a bit like reading a Game of Thrones novel: there are so many different characters, schemes, kingdoms and sub-plots that it’s easy to become lost.

The 161-page, 47-count federal indictment was unsealed in the Eastern District of New York last week. (The DOJ press release and a link to the indictment can be found here.) It alleges a more than twenty-year history of rampant corruption within the Federation Internationale de Football Association (FIFA), the global soccer organization based in Switzerland.

FIFA’s mission is to develop and promote the sport of soccer internationally. There are 209 member associations, each representing soccer in a particular territory or country. The individual member associations are grouped into six continental confederate organizations, each of which assists with governing soccer in a different area of the world. For example, CONCACAF, the North American organization, is a major focus of the indictment. It has forty-one members, including the United States Soccer Federation, and is headquartered in Miami.

The indictment charges fourteen defendants: nine current and former FIFA officials, four sports marketing executives, and one man who acted as an intermediary. (A helpful summary describing the different defendants can be found here.) In addition to the fourteen defendants, the indictment names twenty-five unindicted co-conspirators and describes no fewer than twelve different corruption schemes taking place around the world over the past two decades. FIFA officials are alleged to have accepted more than $150 million in bribes in exchange for being influenced in awarding lucrative marketing and television contracts, rigging FIFA elections, and awarding the right to host soccer’s premier event, the World Cup.

The FIFA Criminal Case

Although it’s lengthy, the bulk of the charges in the indictment fall into only three categories:

The Racketeer Influenced and Corrupt Organizations Act (RICO)

Money laundering and money laundering conspiracy

Wire fraud and wire fraud conspiracy

RICO: The heart of the indictment is an overarching and massive RICO conspiracy lasting more than twenty years and including all fourteen defendants. RICO was passed in the early 1970’s as part of the effort to battle organized crime. It doesn’t really define a new crime so much as criminalize ongoing and organized patterns of already criminal behavior. Over the years, as a result of its expansive language and some equally expansive Supreme Court decisions, RICO has become essentially a glorified conspiracy statute — although considering its twenty-year penalty and provision for forfeiture, maybe it’s more accurate to call RICO conspiracy on steroids.

The use of RICO in white collar cases is sometimes criticized as unnecessary and heavy-handed; a statute aimed at bringing down the mafia does not really seem called for in most white collar crimes. But the scope and magnitude of the FIFA corruption makes it an ideal RICO case. The powerful RICO statute allows the prosecution to bring in all members of a global criminal conspiracy, along with evidence of the criminal acts they committed all around the world, and prosecute everything in a single location. Although FIFA, unlike an organized crime family, is not primarily a criminal organization, the scope and depth of the alleged criminal conduct makes it the type of case for which RICO was born.

RICO requires that the defendants participate in the conduct of the affairs of an “enterprise” through a “pattern of racketeering activity.” The enterprise may be a single legal entity, such as a corporation, or it may be a group of individuals or entities “associated in fact” for a common purpose. In this case, the government has alleged that FIFA and its six continental confederate organizations together form an “association in fact” enterprise, bound together by their common mission of promoting soccer around the world. (Considering FIFA’s global reach, this must be one of the most sweeping RICO enterprises ever charged.)

The “pattern of racketeering activity” element requires that the defendants participated in the conduct of the enterprise’s affairs through a sustained pattern of criminal acts. Here the government charges that the pattern consisted primarily of three types of crimes: bribery and kickbacks, wire fraud, and money laundering.

Wire fraud and wire fraud conspiracy: At its core, the FIFA case is about bribery. But the federal bribery statute applies only to federal government officials and those acting on the government’s behalf. FIFA is a private organization, and even FIFA officials located within the United States would not be covered by the federal bribery law.

Accordingly, to charge bribery of officials within a private sector organization, the indictment relies on honest services wire fraud. The wire fraud statute criminalizes the use of an interstate wire or wireless transmission in furtherance of a “scheme or artifice to defraud.” This commonly involves a scheme to obtain money or property from a victim. However, wire fraud also may be used to charge a defendant who engages in a scheme to deprive another of the intangible right of “honest services.” Honest services fraud is a popular vehicle for charging bribery involving state or local public officials, as well as private sector bribery.

A duty of honest services arises when there is a relationship of trust and responsibility between the parties that gives rise to special obligations of loyalty and candor that do not arise in ordinary contractual or arms-length relationships. The most common private sector example is the duty of honest services that an employee owes to an employer. Those who accept bribes in exchange for violating that duty may be found to have committed honest services fraud. (For a more detailed discussion of the law of honest services fraud, see my earlier post here.)

The FIFA officials are charged with violating the duty of honest services that they owed to FIFA and its member organizations by accepting bribe payments in exchange for the exercise of their official powers concerning the awarding of contracts for sports marketing and other decisions. The non-FIFA defendants, as the bribe payers, are similarly charged with causing the FIFA defendants to violate those duties. As a legal matter this is a relatively straightforward application of honest services fraud. There is little doubt that FIFA officials did owe a duty of honest services to the organization, and if they did accept the bribes as alleged it would be a clear violation of that duty.

Wire fraud also requires that there be a wire or wireless transmission in furtherance of the fraud. The indictment relies primarily on bank wire transfers, many of them international and involving U.S. banks, that allegedly were used to facilitate the bribe payments.

Money laundering and money laundering conspiracy: The money laundering statutes prohibit engaging in financial transactions involving criminal proceeds in order to conceal the nature, origin, source, or ownership of those proceeds, and also prohibit transporting fund across the U.S. border in order to promote certain kinds of criminal activity. The FIFA indictment charges many of the defendants with both kinds of money laundering: they are accused of using various intermediaries, secret bank accounts, shell companies, and other methods to disguise the source and ownership of various bribe payments, and with transmitting funds across the U.S. border to promote their underlying criminal activity of wire fraud.

Once again, if the allegations of the indictment are true, these seem like strong and uncontroversial money laundering charges.

Other charges: Eugenio Figueredo, a current FIFA vice president, alone is charged with falsifying documents in connection with his application for U.S. citizenship and with five counts of tax fraud. And Aaron Davidson, a sports marketing executive, alone is charged with one count of obstruction of justice for alerting other co-conspirators during the grand jury investigation to the possibility that their conversations were being recorded.

Other Issues and Questions in the FIFA Case

On the same day the indictment was unsealed, the government also unsealed the guilty pleas and criminal charges of four other individual defendants and two corporations. These guilty pleas date back to mid-2013 and had remained under seal. That suggests the defendants who pleaded guilty likely were cooperating in the investigation for some time, including recording conversations with their co-conspirators. Such evidence can be crucial to building a complicated conspiracy cases and will be very important at trial.

A case this large will take some time to unfold. Seven of the defendants were arrested in Switzerland at the same time the indictment was being unsealed in the United States, and the process of extraditing those defendants alone could take months. One would also expect a number of additional guilty pleas, as other co-conspirators seek to cooperate with the prosecution and reduce their own potential criminal exposure.

It’s noteworthy that the FIFA case is being prosecuted in the United States. Most of the defendants are not U.S. citizens, and much of the alleged criminal activity took place in other countries. Soccer is not nearly as big in the U.S. as it is in much of the world. One could argue that FIFA corruption should not really be a U.S. priority. But this appears to be one of those, “If not us, then who?” situations – most of the other nations affected simply could not hope to bring such a case. FIFA affects hundreds of millions of people and billions of dollars of economic activity world-wide, and although the corruption was deplored for years, nothing much had been done about it. It took the prosecutorial chops and criminal laws of the U.S. finally to put together such a massive global prosecution.

(As an aside, the Swiss government has opened a separate investigation into allegations of corruption in connection with the selection of the sites for the next two World Cups – Russia in 2018 and Qatar in 2022. There were immediate cries of foul after the selection of Qatar, a country with a spotty record on human rights and where it gets so hot during World Cup season that soccer balls — not to mention soccer players — are known to melt spontaneously. It’s hard to understand such a choice unless someone was getting paid off. These specific allegations are not, however, part of the U.S. indictment.)

The Department of Justice has been pretty aggressive in recent years about asserting jurisdiction over criminal acts that took place in other countries, particularly in cases involving terrorism and the Foreign Corrupt Practices Act. That expansive assertion of extraterritorial jurisdiction has been criticized on occasion. In this case, though, because so many of the corrupt payments went through the U.S. banking system and because of CONCACAF’s location in the U.S., there should be little question about the appropriateness of U.S. criminal jurisdiction.

What I find more interesting is the question of where within the U.S. the case is being prosecuted. The case was investigated and indicted in the Eastern District of New York, the district that covers Long Island and where the new Attorney General, Loretta Lynch, previously served as U.S. Attorney. I’ve seen some commentary suggesting that the E.D.N.Y may have been awarded the case based on its relationship with the new Attorney General, but that doesn’t make much sense. This investigation had been going on in that district for several years, long before anyone knew that Ms. Lynch would be the Attorney General. It’s not as though she moved to D.C. and then decided to hand the prosecution to her former colleagues.

But reviewing the indictment, one is left to wonder how exactly the case ended up where it did. Proper venue in criminal cases is not just a matter of convenience or choice; the Constitution requires that criminal cases be brought in the state in which the offense took place. So although the U.S. may have federal criminal jurisdiction, the question remains which court or courts within the U.S. would have venue.

It appears there would be several other, more logical venues than the E.D.N.Y. For example, CONCACAF, the North American FIFA federation, has its headquarters in Miami (and the FBI executed a search warrant there the day the indictment was unsealed). A number of the bank wire transfers that form the basis of the wire fraud charges also went through Miami banks, and meetings of conspirators and other events are alleged to have taken place there as well. The Southern District of Florida seems a much more logical location for the case.

The Southern District of New York in Manhattan, right next door to the E.D.N.Y., would be another likely venue. When jurisdiction is based in large part on use of the U.S. banking system, the Southern District, as the nation’s financial capital, is often the forum of choice.

The indictment is pretty vague concerning what relationship there is between Brooklyn (the heart of the Eastern District of New York) and the actions of the FIFA co-conspirators. For RICO and the other conspiracy charges, as long as there is at least one overt act in furtherance of the conspiracy within the E.D.N.Y, venue should not be an issue. But for some of the non-conspiracy charges it’s not at all clear on the face of the indictment why venue is proper in the Eastern District of New York.

In some circumstances, if criminal acts do not fall within the jurisdiction of any particular state, venue will be considered proper in any district in which the defendant is first arrested or brought. Perhaps the government hopes to rely on this argument by ensuring that when the defendants arrested in Switzerland are extradited to the U.S. their plane lands at JFK or LaGuardia – both of which are within the E.D.N.Y. But it’s unclear whether that argument would be successful.

It’s possible the case ended up where it is partly by accident. The New York Times reported that the case originally arose out of an unrelated investigation in New York concerning Russian organized crime. Perhaps that original unrelated case had a clearer connection to Brooklyn, but once the prosecutors started focusing on the FIFA allegations that emerged they were reluctant to give the case up. Or perhaps, as sometimes happens, there was a “turf battle” between different U.S. Attorney’s offices over which should take the case, and the E.D.N.Y. prevailed. In any event, it’s going to be interesting to see whether any of these venue issues end up forming the basis for defense motions and possible trouble for the prosecution.

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It will be fascinating to watch how the FIFA case plays out over the months to come. For now, the indictment tells a remarkable and gripping tale of worldwide greed and corruption. Maybe HBO will turn it into a television series — all it needs is a little gratuitous sex and violence. And maybe a dragon.